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Those involved in property investment are well aware of tax liens and levies – these are the homes and properties we want to avoid! Knowing that there are outstanding taxes due is enough to make any investor go on to the next property.
Most of the time, the lien doesn’t actually mean they take or “seize” your property; it just makes it very difficult if not impossible to refinance or sell the property. All the information can be found in a simple title search. The only way to proceed with the sale or refinance is to have the IRS discharge the property from the lien. Sometimes the IRS will accept the equity on the sale (if there is any) in exchange for discharging the lien.
Something to really consider is that since liens and levies are public record, they could affect other parts of your life. One thing for sure is that they will show up on your credit reports. You don’t want a lien or levy to wreak havoc on your life! You need to deal with it. The bottom line is the tax needs to be paid off, plain and simple. If not, it will also affect other property the taxpayer may own.
The IRS has been known to get the lender/bank to decrease the monthly payments so that the property owner subjected to the lien will have the funds to pay the IRS. Notice of Tax Lien filings are done at the Office of the Recorder of Deeds for the county where you live.
A levy is more serious than a lien. With a levy, the IRS can seize your property and your bank account could be frozen up to the amount of the levy for 21 days. You can also challenge the levy, but if not successful, the funds are automatically given to the IRS. If this doesn’t work, they will garnish wages.
The Difference Between a Lien and a Levy
The simple difference between a lien and a levy is their effects on the property you own. A lien is a claim registered against property for not paying taxes. It does not deprive a taxpayer of their property or the right to transfer property. Levies usually happen because of bad communication between the taxpayer and the IRS. A levy is a seizure. It essentially takes your property and transfers ownership to the government.
At the law office of Steven N. Klitzner, we have the knowledge and the experience necessary to assist you with your individual tax situation. Dealing with liens and levies on properties owned can be a stressful experience for anyone; consult with a tax attorney who specializes in tax law and is experienced in helping people with property taxes.